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LOS e, (Part 2): Explain the cash flow, prepayments, and prepayment risk for each type of mortgage-backed security.
Q1. A payment made that is in excess of the required monthly mortgage payment is called:
A) prepayment risk.
B) curtailment.
C) prepayment.
Q2. When a prepayment is less than the entire outstanding principal amount it is called:
A) prepayment risk.
B) securitized.
C) curtailment.
Q3. The risk that relates to the amount and timing of cash flows from a mortgage is known as:
A) liquidity risk.
B) prepayment risk.
C) default risk.
Q4. If a prepayment of principal is for an amount that is less than the full outstanding balance of the loan, it is know as a(n):
A) curtailment.
B) participation.
C) intermediate payment.
Q5. Which of the following statements concerning mortgage-backed securities is most accurate?
A) As rates rise, mortgage-backed security holders face reinvestment risk.
B) Collateralized Mortgage Obligations (CMOs) prioritize the interest payments on mortgages to different sets of investors.
C) Curtailment of a mortgage is a prepayment of less than the full principal.
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发表于 2009-3-2 16:28
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